After tax profit earnings increased to $1.62 billion, within analysts estimates.

Sales increased 10.3pc to $47 billion from last year - in line with analysts's estimates - helped by a rise in the cost of petrol.

The company announced a final dividend of 48 cents fully franked.

But it poured cold water on hopes for a cash return, saying it was smarter to hold on to its funds given the uncertainty in debt and equity markets, rather than holding to a promise to return capital if it did not make any major acquisitions in 2008.

"A lot of people in the market were looking for some buyback details, given that Woolies has the available cash, and there is a little disappointment they didn't provide that,'' said Angus Gluskie, a portfolio manager at White Funds Management.

In afternoon trading, Woolworths shares were down 34 cents, or 1.3pc, to $26.52, after going as low as $25.84.

Woolworths, which continues to snatch market share from rival Coles, forecast 11-14pc profit growth in the year ahead and also said it was looking for acquisitions in Australia and offshore.

"We have continued to refine our brand proposition with significant investment in price, merchandise range and quality during the year," said chief executive Michael Luscombe, in a statement.

"The investment continues to deliver gains in market share."

Chairman James Strong cited the company's "significant intellectual property" in the area of supply chain as key to the company's results.

Woolworths food and liquor sales got a boost from the expansion and remodelling of 200 locations this year, which provided more floor space for higher margin fresh items.

But the company fears inflation, volatile petrol prices, high interest rates and sagging consumer confidence could weigh on its group sales, which are projected to grow in the upper single digits.